GAAP EPS Up 24% to a Q3 Record $0.51 Per Share;
Non-GAAP EPS Up 17% to a Record $0.49 Per Share
Comparable Store Sales Rise 7% in China, 4% in
the U.S. and 4% Globally
Revenues Up 7% to Q3 Record $5.2 Billion;
Operating Income Up 9% to a Q3 Record $1.0 Billion
Channel Development Revenues Increase 9%;
Operating Income Jumps 31%
Starbucks Rewards Active Membership Up 18% YOY;
Now Over 12 Million Active Members in the U.S. and Canada
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal third quarter and 39-week fiscal
year to date ended June 26, 2016. Fiscal 2016 and fiscal 2015
GAAP results include items which are excluded from non-GAAP
results. Please refer to the reconciliation of GAAP measures to
non-GAAP measures at the end of this release for more
information.
Q3 Fiscal 2016 Highlights:
- Global comparable store sales increased
4%, comprised of a 4% increase in the Americas segment, a 3%
increase in the China/Asia Pacific segment, and a 1% decline in the
EMEA segment
- Consolidated net revenues grew 7% to a
Q3 record $5.2 billion
- Consolidated GAAP operating income
increased 9% to a Q3 record $1.0 billion
- Non-GAAP operating income increased 9%
over Q3 FY15 non-GAAP, to a Q3 record $1.0 billion
- Consolidated GAAP operating margin
increased 30 basis points to a Q3 record 19.5%
- Non-GAAP operating margin expanded 30
basis points over Q3 FY15 non-GAAP, to a Q3 record 19.8%
- GAAP EPS increased 24% to a Q3 record
$0.51 per share
- Non-GAAP EPS increased 17% over Q3 FY15
non-GAAP, to a record $0.49 per share
- Channel Development revenues grew 9% to
a Q3 record $441 million; operating income increased 31% to a Q3
record $188 million; operating margin expanded 710 basis points to
a Q3 record 43%
- The company opened 474 net new stores
globally in Q3, bringing total stores to 24,395 in 74 countries
worldwide
- Mobile Order and Pay usage reached 5%
of U.S. transactions, up from 4% in Q2 FY16
- Membership in the company's Starbucks
Rewards loyalty program increased 18% year-over-year to 12.3
million active loyalty members in the U.S.
“Starbucks record Q3 performance, highlighted by strong 7% comp
growth and record revenues and profits in China and 18%
year-over-year growth in our Starbucks Rewards loyalty program,
demonstrates the strength and resilience of the Starbucks brand and
business around the world,” said Starbucks chairman and ceo Howard
Schultz. “As we enter Q4 and approach fiscal 2017, we have clear
line of sight to returning our U.S. business to historic levels of
comp sales growth which had been at or above 5% for the 25
consecutive quarters prior to Q3.”
“Starbucks third quarter results once again reflect strong
revenue and profit growth and represent the first non-holiday
quarter in which our operating income exceeded $1 billion,” said
Scott Maw, cfo. “We are confident in the correctness of the
strategic, operational and digital moves we outlined today and
remain steadfast in our commitment to deliver significant,
profitable growth over the long term.”
Third Quarter Fiscal 2016
Summary
Quarter Ended Jun 26, 2016 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated(2) 4%
0% 4% Americas 4% 0% 4% CAP(2) 3% 2% 1% EMEA
(1)% 0% (2)%
(1) Includes only Starbucks company-operated stores open 13
months or longer.
(2) Beginning in December of fiscal 2016, comparable store sales
include the results of the 1,009 company-operated stores acquired
as part of the acquisition of Starbucks Japan in the first quarter
of fiscal 2015.
Operating Results Quarter Ended ($ in
millions, except per share amounts)
Jun 26, 2016
Jun 28, 2015 Change Net New Stores 474
431 43 Revenues $5,238.0 $4,881.2 7% Operating Income
$1,022.3 $938.6 9% Operating Margin 19.5% 19.2% 30 bps EPS
$0.51 $0.41 24%
Consolidated net revenues were $5.2 billion in Q3 FY16, an
increase of 7% over Q3 FY15. The increase was primarily driven by
the opening of 1,876 net new stores over the past 12 months and a
4% increase in global comparable store sales.
Consolidated operating income grew 9% to $1,022.3 million in Q3
FY16, up from $938.6 million in Q3 FY15. Consolidated operating
margin expanded 30 basis points to 19.5%. The increase was
primarily due to sales leverage and lower commodity costs,
primarily coffee, and was partially offset by investments in our
partners (employees) and digital platforms.
Q3 Americas Segment
Results
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change Net
New Stores 194 171 23 Revenues $3,645.5 $3,414.6 7%
Operating Income $898.5 $855.3 5% Operating Margin 24.6%
25.0% (40) bps
Net revenues for the Americas segment were $3.6 billion in Q3
FY16, an increase of 7% over Q3 FY15. The increase was driven by a
4% increase in comparable store sales and incremental revenues from
730 net new store openings over the past 12 months.
Operating income of $898.5 million in Q3 FY16 grew 5% versus
$855.3 million in Q3 FY15. Operating margin of 24.6% declined 40
basis points primarily due to investments in our partners
(employees), partially offset by sales leverage and lower commodity
costs.
Q3 China/Asia Pacific Segment
Results
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change Net
New Stores 209 205 4 Revenues $768.2 $652.7 18% Operating
Income $182.8 $150.0 22% Operating Margin 23.8% 23.0%
80 bps
Net revenues for the China/Asia Pacific segment grew 18% over Q3
FY15 to $768.2 million in Q3 FY16. The increase was primarily
driven by incremental revenues from 888 net new store openings over
the past 12 months.
Operating income grew 22% over Q3 FY15 to $182.8 million in Q3
FY16. Operating margin expanded 80 basis points to 23.8% primarily
driven by higher income from our joint venture operations and sales
leverage, partially offset by the impact of foreign currency
translation.
Q3 EMEA Segment Results
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change Net
New Stores 77 58 19 Revenues $273.4 $294.7 (7)% Operating
Income $29.9 $36.0 (17)% Operating Margin 10.9% 12.2%
(130) bps
Net revenues for the EMEA segment were $273.4 million in Q3
FY16, a 7% decrease versus Q3 FY15. The decrease was primarily due
to the conversion of 226 company-operated stores to licensed stores
over the past 12 months, which included the sale of our Germany
retail operations in Q3 FY16, and unfavorable foreign currency
translation. Partially offsetting the decrease were incremental
revenues from the opening of 291 net new licensed stores over the
past 12 months.
Operating income decreased 17% to $29.9 million in Q3 FY16, down
from $36.0 million in Q3 FY15. Operating margin declined 130 basis
points to 10.9%, primarily due to the sale of our Germany retail
operations, driven by costs related to the sale and the resulting
reduction of company-operated revenue. Sales deleverage of certain
company-operated stores in the region also contributed. The margin
decline was partially offset by sales leverage driven by the shift
in the portfolio towards more licensed stores.
Q3 Channel Development Segment
Results
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change
Revenues $440.8 $403.6 9% Operating Income $187.8 $143.4 31%
Operating Margin 42.6% 35.5% 710 bps
Net revenues for the Channel Development segment grew 9% over Q3
FY15 to $440.8 million in Q3 FY16, primarily driven by increased
sales of premium single-serve products. Also contributing to the
increase were higher foodservice sales and sales of packaged
coffee.
Operating income of $187.8 million in Q3 FY16 increased 31%
compared to Q3 FY15. Operating margin increased 710 basis points to
42.6%, primarily driven by lower coffee costs, decreased marketing
spend, higher income from the North American Coffee Partnership,
and leverage on cost of sales.
Q3 All Other Segments
Results
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change Net
New Stores (6) (3) (3) Revenues $110.1 $115.6 (5)% Operating
Loss $(14.9) $(13.1) 14%
Year to Date Financial
Results
Three Quarters Ended Jun 26, 2016 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated(2) 6%
2% 4% Americas 7% 2% 5% CAP(2) 4% 2% 2% EMEA
0% 1% 0%
(1) Includes only Starbucks company-operated stores open 13
months or longer.
(2) Beginning in December of fiscal 2016, comparable store sales
include the results of the 1,009 company-operated stores acquired
as part of the acquisition of Starbucks Japan in the first quarter
of fiscal 2015.
Operating Results Three Quarters Ended
($ in millions, except per share amounts)
Jun 26,
2016 Jun 28, 2015 Change Net New
Stores 1,352 1,153 199 Revenues $15,604.7 $14,247.9 10%
Operating Income $2,944.5 $2,631.6 12% Operating Margin 18.9% 18.5%
40 bps EPS $1.35 $1.39 (3)%
Fiscal 2016 Targets
Starbucks fiscal year 2016 will include an extra week in the
fourth quarter, because it is a 53-week year for the company.
The company reiterates the following FY16 targets, unless
otherwise noted. FY16 targets are based on actual FY15 non-GAAP
results and projected FY16 non-GAAP results as noted. Please refer
to the reconciliation of GAAP measures to non-GAAP measures at the
end of this release.
- Now expecting approximately 1,900 net
new store openings in the fiscal year (from 1,800):
- Americas: now expecting approximately
750, half licensed (from 700)
- China/Asia Pacific: approximately 900,
two-thirds licensed
- EMEA: now expecting approximately 250,
primarily licensed (from 200)
- Full year consolidated revenue growth
now expected to be approximately 10% on a 52 week basis (from
10%+), the 53rd week expected to add approximately 2%
- Full year global comparable store sales
growth now expected to be mid-single digits (from somewhat above
mid-single digits)
- FY16 operating margin is expected to
increase slightly versus prior year:
- Americas: now expected to increase
slightly over prior year (from moderate improvement)
- China/Asia Pacific: now expected to
increase slightly over prior year (from roughly flat)
- EMEA: now expected to be flat to prior
year (from approaching 15%)
- Channel Development: now expect strong
expansion versus prior year (from moderate improvement)
- Consolidated tax rate now expected to
be approximately 33% (from 34%)
- Full year FY16 earnings per share,
including an estimated $0.06 for the 53rd week in Q4:
- GAAP EPS now expected to be in the
range of $1.88 to $1.89 (up from a range of $1.85 to $1.86 due to
the gain on the sale of our Germany retail operations in Q3
FY16)
- Non-GAAP EPS in the range of $1.88 to
$1.89 (reiterated)
- Introduced - Q4 FY16 earnings
per share, including an estimated $0.06 for the 53rd week:
- GAAP EPS in the range of $0.53 to
$0.54
- Non-GAAP EPS in the range of $0.54 to
$0.55
- Capital expenditures of approximately
$1.4 billion
Company Updates
- Earlier this month, Starbucks announced
its role as global licensee and investor in the Italian restaurant
Princi, a renowned boutique bakery and café with locations in Milan
and London. The investment team, which includes Milan-based Angel
Lab and Pekepan Investments, will focus on expanding the number of
standalone Princi locations worldwide as well as making Princi the
exclusive food purveyor at the new Starbucks ReserveTM Roastery and
Tasting Rooms and in Starbucks Reserve®-only stores as they open
beginning in 2017.
- The company rolled out mobile payment
in China and Japan in recent months, building on its rapidly
expanding portfolio of digital innovations in the region.
- In July, the company made announcements
that reflect its ongoing commitment to invest in its partners
(employees); developments apply to certain populations of U.S.
partners and include base pay increases, enhancements to Bean
Stock, an evolving health care program, a commitment to scheduling
consideration, and changes to dress code.
- Starbucks opened its first location in
the Central European country of Slovakia in May; in partnership
with AmRest, a long term strategic partner of the company and the
largest independent operator of restaurant chains in Central and
Eastern Europe.
- In June, the company opened a flagship
location inside Disneytown at the new Shanghai Disney Resort,
representing its 12th Starbucks store inside a Disney resort
globally.
- Anheuser-Busch and Starbucks announced
in June that they are working together to produce, bottle,
distribute and market the first Teavana Ready-to-Drink (RTD) tea in
the U.S., with an anticipated product launch in 2017.
- The company announced Shanghai, China
as the location of its first international Starbucks Reserve
Roastery and Tasting Room. Scheduled to open in late 2017, the
30,000 square-foot space will reflect a similar, immersive
all-sensory experience as the company’s first location, which
debuted in its hometown of Seattle, Washington in 2014.
- In May, Starbucks announced that it had
closed an underwritten public offering of senior notes, including
the first U.S. Corporate Sustainability Bond. The company will use
the net proceeds from the offering of $500 million in 2.450% Senior
Notes due 2026 to enhance its sustainability programs around coffee
supply chain management through Eligible Sustainability
Projects.
- The Board of Directors declared a cash
dividend of $0.20 per share, payable on August 19, 2016 to
shareholders of record as of August 4, 2016.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Howard Schultz, chairman and ceo;
Kevin Johnson, president and coo; and Scott Maw, cfo. The call will
be webcast and can be accessed at http://investor.starbucks.com. A
replay of the webcast will be available until end of day Saturday,
August 20, 2016.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with stores around the globe, the company is the premier roaster
and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at news.starbucks.com or
www.starbucks.com.
Forward-Looking
Statements
This release contains forward-looking statements relating to
certain company initiatives, strategies and plans, as well as
trends in or expectations regarding our diversified business model,
the strength, resilience and potential of our business, operations
and brand, our innovation, growth and growth opportunities and
related investments, our strategic, operational and digital moves,
our long term financial targets, earnings per share, revenues,
operating margins, capital expenditures, tax rate, anticipated
costs related to the integration of Starbucks Japan, comparable
store sales and transactions, and net new stores. These
forward-looking statements are based on currently available
operating, financial and competitive information and are subject to
a number of significant risks and uncertainties. Actual future
results may differ materially depending on a variety of factors
including, but not limited to, fluctuations in U.S. and
international economies and currencies, our ability to preserve,
grow and leverage our brands, potential negative effects of
material breaches of our information technology systems to the
extent we experience a material breach, potential negative effects
of incidents involving food-borne illnesses, food tampering, food
contamination or mislabeling, material failures of our information
technology systems, costs associated with, and the successful
execution of, the company’s initiatives and plans, including the
integration of Starbucks Japan, the acceptance of the company’s
products by our customers, the impact of competition, coffee, dairy
and other raw materials prices and availability, the effect of
legal proceedings, and other risks detailed in the company filings
with the Securities and Exchange Commission, including the “Risk
Factors” section of Starbucks Annual Report on Form 10-K for the
fiscal year ended September 27, 2015. The company assumes no
obligation to update any of these forward-looking statements.
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited, in millions, except per share data)
Quarter Ended Quarter Ended Jun
26, 2016 Jun 28, 2015
%
Change
Jun 26, 2016 Jun 28, 2015
As a % of totalnet revenues Net revenues:
Company-operated stores $ 4,181.6 $ 3,915.0 6.8 % 79.8 %
80.2 % Licensed stores 527.2 475.2 10.9 10.1 9.7 CPG, foodservice
and other 529.2 491.0 7.8 10.1 10.1
Total net revenues 5,238.0 4,881.2 7.3
100.0 100.0 Cost of sales including occupancy costs
2,060.3 1,953.9 5.4 39.3 40.0 Store operating expenses 1,529.4
1,392.4 9.8 29.2 28.5 Other operating expenses 137.5 131.6 4.5 2.6
2.7 Depreciation and amortization expenses 247.6 236.5 4.7 4.7 4.8
General and administrative expenses 323.4 288.5 12.1
6.2 5.9 Total operating expenses 4,298.2 4,002.9 7.4
82.1 82.0 Income from equity investees 82.5 60.3 36.8
1.6 1.2
Operating income 1,022.3
938.6 8.9 19.5 19.2 Interest income and
other, net 72.9 25.5 185.9 1.4 0.5 Interest expense (21.8 ) (19.1 )
14.1 (0.4 ) (0.4 ) Earnings before income taxes 1,073.4 945.0 13.6
20.5 19.4 Income tax expense 318.9 318.5 0.1 6.1
6.5 Net earnings including noncontrolling interests
754.5 626.5 20.4 14.4 12.8 Net earnings/(loss) attributable to
noncontrolling interests 0.4 (0.2 ) nm — —
Net earnings attributable to Starbucks $ 754.1
$ 626.7 20.3 14.4
% 12.8 % Net earnings per common
share - diluted $ 0.51 $
0.41 24.4 % Weighted avg. shares
outstanding - diluted 1,479.3 1,515.7 Cash dividends
declared per share $ 0.20 $ 0.16
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 36.6 % 35.6 % Effective tax rate including noncontrolling
interests 29.7 % 33.7 %
Three Quarters Ended
Three Quarters Ended Jun 26, 2016
Jun 28, 2015 %
Change
Jun 26, 2016 Jun 28, 2015
As a % of totalnet revenues Net revenues:
Company-operated stores $ 12,336.3 $ 11,310.7 9.1 % 79.1 %
79.4 % Licensed stores 1,561.0 1,380.5 13.1 10.0 9.7 CPG,
foodservice and other 1,707.4 1,556.7 9.7 10.9
10.9
Total net revenues 15,604.7
14,247.9 9.5 100.0 100.0 Cost of sales
including occupancy costs 6,256.9 5,804.9 7.8 40.1 40.7 Store
operating expenses 4,502.0 4,032.5 11.6 28.9 28.3 Other operating
expenses 423.3 394.5 7.3 2.7 2.8 Depreciation and amortization
expenses 730.9 659.6 10.8 4.7 4.6 General and administrative
expenses 959.4 892.8 7.5 6.1 6.3 Total
operating expenses 12,872.5 11,784.3 9.2 82.5 82.7 Income from
equity investees 212.3 168.0 26.4 1.4 1.2
Operating income 2,944.5 2,631.6
11.9 18.9 18.5 Gain resulting from acquisition
of joint venture — 390.6 (100.0 ) — 2.7 Interest income and other,
net 95.5 36.6 160.9 0.6 0.3 Interest expense (56.6 ) (52.3 ) 8.2
(0.4 ) (0.4 ) Earnings before income taxes 2,983.4 3,006.5 (0.8 )
19.1 21.1 Income taxes 966.2 899.7 7.4 6.2 6.3
Net earnings including noncontrolling interests 2,017.2
2,106.8 (4.3 ) 12.9 14.8 Net earnings attributable to
noncontrolling interests 0.4 1.9 (78.9 ) — —
Net earnings attributable to Starbucks $
2,016.8 $ 2,104.9 (4.2
)% 12.9 % 14.8 % Net
earnings per common share - diluted $ 1.35
$ 1.39 (2.9 )% Weighted avg.
shares outstanding - diluted 1,489.7 1,516.3 Cash dividends
declared per share $ 0.60 $ 0.48
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 36.5 % 35.7 % Effective tax rate including noncontrolling
interests 32.4 % 29.9 %
Segment Results
(in millions)
Americas
Jun 26, 2016
Jun 28, 2015
%
Change
Jun 26, 2016
Jun 28, 2015
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 3,269.0 $ 3,061.3
6.8 % 89.7 % 89.7 % Licensed stores 368.6 344.9 6.9 10.1 10.1
Foodservice and other 7.9 8.4 (6.0 ) 0.2 0.2
Total net revenues 3,645.5 3,414.6
6.8 100.0 100.0 Cost of sales including
occupancy costs 1,289.0 1,227.7 5.0 35.4 36.0 Store operating
expenses 1,236.1 1,126.7 9.7 33.9 33.0 Other operating expenses
25.4 26.9 (5.6 ) 0.7 0.8 Depreciation and amortization expenses
149.2 130.8 14.1 4.1 3.8 General and administrative expenses 47.3
47.2 0.2 1.3 1.4 Total operating
expenses 2,747.0 2,559.3 7.3 75.4 75.0
Operating income $ 898.5 $
855.3 5.1 % 24.6 %
25.0 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 37.8 %
36.8 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 9,697.2 $ 8,890.5 9.1 %
89.6 % 89.7 % Licensed stores 1,108.0 993.0 11.6 10.2 10.0
Foodservice and other 22.0 26.0 (15.4 ) 0.2
0.3
Total net revenues 10,827.2 9,909.5
9.3 100.0 100.0 Cost of sales including
occupancy costs 3,865.9 3,624.4 6.7 35.7 36.6 Store operating
expenses 3,649.6 3,276.1 11.4 33.7 33.1 Other operating expenses
85.7 93.4 (8.2 ) 0.8 0.9 Depreciation and amortization expenses
441.6 386.5 14.3 4.1 3.9 General and administrative expenses 139.3
146.6 (5.0 ) 1.3 1.5 Total operating
expenses 8,182.1 7,527.0 8.7 75.6 76.0
Operating income $ 2,645.1 $
2,382.5 11.0 % 24.4 %
24.0 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 37.6 %
36.8 %
China/Asia Pacific (CAP)
Jun 26, 2016
Jun 28, 2015
%
Change
Jun 26, 2016
Jun 28, 2015
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 695.4 $ 588.4 18.2 %
90.5 % 90.1 % Licensed stores 71.6 63.1 13.5 9.3 9.7 Foodservice
and other 1.2 1.2 — 0.2 0.2
Total
net revenues 768.2 652.7 17.7 100.0
100.0 Cost of sales including occupancy costs 331.2 281.8
17.5 43.1 43.2 Store operating expenses 200.4 161.2 24.3 26.1 24.7
Other operating expenses 16.2 15.8 2.5 2.1 2.4 Depreciation and
amortization expenses 45.7 41.2 10.9 5.9 6.3 General and
administrative expenses 32.1 30.3 5.9 4.2 4.6
Total operating expenses 625.6 530.3 18.0 81.4 81.2 Income
from equity investees 40.2 27.6 45.7 5.2 4.2
Operating income $ 182.8
$ 150.0 21.9 % 23.8
% 23.0 % Supplemental Ratios: Store
operating expenses as a percentage of company-operated store
revenues 28.8 % 27.4 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 1,884.0 $ 1,542.5 22.1 %
89.7 % 88.5 % Licensed stores 210.7 197.6 6.6 10.0 11.3 Foodservice
and other 4.9 3.5 40.0 0.2 0.2
Total
net revenues 2,099.6 1,743.6 20.4
100.0 100.0 Cost of sales including occupancy costs
933.5 784.8 18.9 44.5 45.0 Store operating expenses 558.0 436.0
28.0 26.6 25.0 Other operating expenses 48.3 43.4 11.3 2.3 2.5
Depreciation and amortization expenses 131.7 106.3 23.9 6.3 6.1
General and administrative expenses 93.2 88.4 5.4 4.4
5.1 Total operating expenses 1,764.7 1,458.9 21.0
84.0 83.7 Income from equity investees 104.3 85.8
21.6 5.0 4.9
Operating income $
439.2 $ 370.5 18.5
% 20.9 % 21.2 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 29.6 % 28.3 %
EMEA
Jun 26, 2016
Jun 28, 2015
%
Change
Jun 26, 2016
Jun 28, 2015
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 174.3 $ 217.8 (20.0
)% 63.8 % 73.9 % Licensed stores 86.2 65.5 31.6 31.5 22.2
Foodservice 12.9 11.4 13.2 4.7 3.9
Total net revenues 273.4 294.7 (7.2
) 100.0 100.0 Cost of sales including
occupancy costs 139.2 143.1 (2.7 ) 50.9 48.6 Store operating
expenses 69.0 78.4 (12.0 ) 25.2 26.6 Other operating expenses 13.4
12.9 3.9 4.9 4.4 Depreciation and amortization expenses 10.3 12.4
(16.9 ) 3.8 4.2 General and administrative expenses 11.6
12.8 (9.4 ) 4.2 4.3 Total operating expenses
243.5 259.6 (6.2 ) 89.1 88.1 Income from equity investees —
0.9 (100.0 ) — 0.3
Operating income
$ 29.9 $ 36.0
(16.9 )% 10.9 % 12.2 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 39.6 % 36.0 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 576.0 $ 688.0 (16.3 )% 67.4
% 75.7 % Licensed stores 239.3 185.4 29.1 28.0 20.4 Foodservice
39.4 35.0 12.6 4.6 3.9
Total net
revenues 854.7 908.4 (5.9 )
100.0 100.0 Cost of sales including occupancy costs
427.2 434.4 (1.7 ) 50.0 47.8 Store operating expenses 209.4 240.4
(12.9 ) 24.5 26.5 Other operating expenses 42.0 40.0 5.0 4.9 4.4
Depreciation and amortization expenses 32.4 38.9 (16.7 ) 3.8 4.3
General and administrative expenses 39.4 41.6 (5.3 )
4.6 4.6 Total operating expenses 750.4 795.3 (5.6 )
87.8 87.5 Income from equity investees 1.5 2.1 (28.6
) 0.2 0.2
Operating income $
105.8 $ 115.2 (8.2
)% 12.4 % 12.7 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 36.4 % 34.9 %
Channel Development
Jun 26, 2016
Jun 28, 2015
%
Change
Jun 26, 2016
Jun 28, 2015
Quarter
Ended
As a % ofChannel Development total
net revenues Net revenues: CPG $ 333.0 $ 302.2 10.2 %
75.5 % 74.9 % Foodservice 107.8 101.4 6.3 24.5
25.1
Total net revenues 440.8 403.6
9.2 100.0 100.0 Cost of sales 232.3 228.3 1.8
52.7 56.6 Other operating expenses 58.0 58.9 (1.5 ) 13.2 14.6
Depreciation and amortization expenses 0.7 0.7 — 0.2 0.2 General
and administrative expenses 4.3 4.1 4.9 1.0
1.0 Total operating expenses 295.3 292.0 1.1 67.0 72.3
Income from equity investees 42.3 31.8 33.0 9.6
7.9
Operating income $ 187.8
$ 143.4 31.0 %
42.6 % 35.5 %
Three Quarters
Ended
Net revenues: CPG $ 1,086.5 $ 975.8 11.3 % 76.8 % 76.6 %
Foodservice 327.5 298.4 9.8 23.2 23.4
Total net revenues 1,414.0 1,274.2 11.0
100.0 100.0 Cost of sales 770.6 722.2 6.7 54.5 56.7
Other operating expenses 171.8 160.9 6.8 12.1 12.6 Depreciation and
amortization expenses 2.1 2.0 5.0 0.1 0.2 General and
administrative expenses 13.0 12.5 4.0 0.9 1.0
Total operating expenses 957.5 897.6 6.7 67.7 70.4 Income
from equity investees 106.5 80.1 33.0 7.5 6.3
Operating income $ 563.0
$ 456.7 23.3 % 39.8
% 35.8 %
All Other Segments
Jun 26,
2016 Jun 28, 2015 %
Change
Quarter
Ended
Net revenues: Company-operated stores $ 42.9 $ 47.5
(9.7 )% Licensed stores 0.8 1.7 (52.9 ) CPG, foodservice and other
66.4 66.4 —
Total net revenues 110.1
115.6 (4.8 ) Cost of sales including occupancy
costs 68.3 72.7 (6.1 ) Store operating expenses 23.9 26.1 (8.4 )
Other operating expenses 24.3 17.3 40.5 Depreciation and
amortization expenses 3.1 4.3 (27.9 ) General and administrative
expenses 5.4 8.3 (34.9 ) Total operating expenses
125.0 128.7 (2.9 )
Operating loss $
(14.9 ) $ (13.1 ) 13.7
%
Three Quarters
Ended
Net revenues: Company-operated stores $ 179.1 $ 189.7 (5.6 )%
Licensed stores 3.0 4.5 (33.3 ) CPG, foodservice and other 227.1
218.0 4.2
Total net revenues 409.2
412.2 (0.7 ) Cost of sales including occupancy
costs 246.7 242.5 1.7 Store operating expenses 85.0 80.0 6.3 Other
operating expenses 75.3 57.1 31.9 Depreciation and amortization
expenses 10.1 12.2 (17.2 ) General and administrative expenses 20.2
27.2 (25.7 ) Total operating expenses 437.3
419.0 4.4
Operating loss $ (28.1
) $ (6.8 ) 313.2 %
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended ($ in millions)
Jun
26, 2016 Jun 28, 2015 Change
Revenues $3,327.1 $3,091.0 8% Comparable Store Sales
Growth(1) 4% 8% Change in Transactions 0% 4% Change in Ticket
4% 4%
(1) Includes only Starbucks company-operated stores open 13
months or longer.
Store Data
Net stores opened/(closed) and transferred during the
period Quarter Ended
Three Quarters Ended Stores open as of Jun 26,
2016 Jun 28, 2015 Jun 26,
2016 Jun 28, 2015 Jun 26,
2016 Jun 28, 2015 Americas(1):
Company-operated stores 85 68 204 187 8,875 8,582 Licensed stores
109 103 293 192 6,425 5,988
Total Americas 194 171 497 379 15,300
14,570 China/Asia Pacific(2): Company-operated stores 79 82
223 1,219 2,675 2,351 Licensed stores 130 123 442
(604 ) 3,452 2,888 Total China/Asia Pacific 209
205 665 615 6,127 5,239 EMEA(3):
Company-operated stores (147 ) (9 ) (196 ) (33 ) 541 784 Licensed
stores 224 67 399 184 2,024
1,507 Total EMEA 77 58 203 151 2,565
2,291 All Other Segments: Company-operated stores (5 ) (1 )
(10 ) 9 365 378 Licensed stores (1 ) (2 ) (3 ) (1 ) 38 41
Total All Other Segments (6 ) (3 ) (13 ) 8 403 419
Total Company
474 431 1,352
1,153 24,395 22,519
(1) Americas store data includes the closure of 132 Target
Canada licensed stores in the second quarter of fiscal 2015.
(2) China/Asia Pacific store data includes the transfer of 1,009
Japan stores from licensed stores to company-operated as a result
of the acquisition of Starbucks Japan in the first quarter of
fiscal 2015.
(3) EMEA store data includes the transfer of 144 Germany
company-operated retail stores to licensed stores as a result of
the sale to AmRest Holdings SE in the third quarter of fiscal
2016.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides consolidated non-GAAP operating income,
consolidated non-GAAP operating margin and consolidated non-GAAP
earnings per share ("non-GAAP EPS") for Q3 fiscal 2016 and fiscal
2015; China/Asia Pacific (“CAP”) segment non-GAAP operating income
and non-GAAP operating margin for Q3 fiscal 2016 and fiscal 2015;
Europe, Middle East, and Africa (“EMEA”) segment non-GAAP operating
income and non-GAAP operating margin for Q3 fiscal 2016 and fiscal
2015; and consolidated non-GAAP EPS for Q4 and full year fiscal
2015, as well as projected consolidated non-GAAP EPS for Q4 and
full year fiscal 2016. These non-GAAP financial measures are not in
accordance with, or alternatives for, generally accepted accounting
principles in the United States. The GAAP measures most directly
comparable to non-GAAP operating income, non-GAAP operating margin,
and non-GAAP EPS are operating income, operating margin, and
diluted net earnings per share, respectively. The company’s
management believes that providing these non-GAAP financial
measures better enables investors to understand and evaluate the
company’s historical and prospective operating performance.
The consolidated Q3 fiscal 2016 as well as the consolidated Q3
fiscal 2015 non-GAAP financial measures exclude certain Starbucks
Japan acquisition-related items, specifically amortization expense
from acquired intangible assets and transaction and integration
costs. The consolidated Q3 fiscal 2016 non-GAAP operating income
and non-GAAP operating margin financial measures also exclude
divestiture-related costs related to the sale of the German retail
operations. The consolidated Q3 fiscal 2016 non-GAAP EPS financial
measure also excludes a gain on sale of the German retail
operations, which is net of divestiture-related costs, and an
incremental tax benefit related to prior fiscal years for a U.S.
manufacturing deduction. The Q3 fiscal 2016 and fiscal 2015 CAP
segment non-GAAP financial measures exclude the amortization
expense from acquired intangible assets related to the acquisition
of Starbucks Japan. The Q3 fiscal 2016 CAP segment non-GAAP
financial measures also exclude integration costs, such as
incremental information technology and compensation-related costs
associated with the acquisition. The Q3 fiscal 2016 EMEA segment
non-GAAP financial measures exclude divestiture-related costs
related to the sale of the German retail operations. The
consolidated Q4 and full year fiscal 2015 non-GAAP EPS financial
measures exclude the Starbucks Japan acquisition-related items,
losses and costs related to the redemption of the company's $550
million of 6.250% 2017 Senior Notes and an incremental tax benefit
related to a U.S. manufacturing deduction. Losses and costs related
to the redemption of the company's $550 million of 6.250% 2017
Senior Notes are included as debt extinguishment-related items. The
consolidated full year fiscal 2015 non-GAAP EPS financial measure
also excludes a gain resulting from a fair value adjustment of
Starbucks preexisting 39.5% ownership interest in Starbucks Japan
prior to the acquisition. Management excludes the
acquisition-related transaction costs as well as the
divestiture-related costs described above because they believe
these items do not reflect expected future expenses and do not
contribute to a meaningful evaluation of the company’s future
operating performance or comparisons to the company’s past
operating performance. In addition, management believes it is
useful to exclude the Starbucks Japan integration costs and the
amortization of the acquired intangible assets when evaluating
performance because they are not representative of our core
business operations. Although these items will affect earnings per
share beyond the current fiscal year, the majority of these costs
will be recognized over a finite period of time. More specifically,
integration costs are expected to be concentrated in the first
several years post-acquisition. Additionally, the amounts of the
acquired intangible assets are specific to the transaction and the
related amortization was fixed at the time of acquisition and
generally cannot subsequently be changed or influenced by
management in a future period. Management excludes the Starbucks
Japan fair value gain, debt extinguishment-related items, gain on
sale of the German retail operations and the incremental tax
benefits because they believe these items do not reflect future
gains, losses, costs or tax benefits and do not contribute to a
meaningful evaluation of the company’s fiscal 2016 or fiscal 2015
operating performance or comparisons of the company’s fiscal 2016
or fiscal 2015 operating performance to the company’s past or
future operating performance.
The projected consolidated non-GAAP EPS for Q4 and full year
fiscal 2016 financial measures exclude certain Starbucks Japan
acquisition-related items comprised of projected amortization
expense from acquired intangible assets and transaction and
integration costs. The projected full year fiscal 2016 financial
measure also excludes the net gain on sale of the German retail
operations and incremental tax benefit related to prior years for a
U.S. manufacturing deduction. Management is excluding these items
from our projected non-GAAP financial measures for the same reasons
described above.
These non-GAAP financial measures may have limitations as
analytical tools, and these measures should not be considered in
isolation or as a substitute for analysis of the company’s results
as reported under GAAP. Other companies may calculate these
non-GAAP financial measures differently than the company does,
limiting the usefulness of those measures for comparative
purposes.
STARBUCKS CORPORATION RECONCILIATION OF SELECTED GAAP
MEASURES TO NON-GAAP MEASURES
(unaudited)
Quarter Ended Jun 26,
2016 Jun 28, 2015 Change
Consolidated
Operating income, as reported (GAAP) $ 1,022.3 $ 938.6 8.9%
Starbucks Japan acquisition-related items - other(1) 14.5 11.5
Costs incurred on sale of Germany retail operations 2.8 —
Non-GAAP operating income $ 1,039.6 $ 950.1
9.4% Operating margin, as reported (GAAP) 19.5 % 19.2 % 30
bps Starbucks Japan acquisition-related items - other(1) 0.3 0.2
Costs incurred on sale of Germany retail operations 0.1 —
Non-GAAP operating margin 19.8 % 19.5 % 30 bps
Diluted net earnings per share, as reported (GAAP) $ 0.51 $ 0.41
24.4% Starbucks Japan acquisition-related items - other(1) 0.01
0.01 Gain on sale of Germany retail operations(2) (0.02 ) — Income
tax effect on Non-GAAP adjustments(3) — — Other tax matters(4)
(0.01 ) — Non-GAAP net earnings per share $ 0.49 $
0.42 16.7%
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 182.8 $ 150.0 21.9%
Starbucks Japan acquisition-related items(5) 13.8 11.0
Non-GAAP operating income $ 196.6 $ 161.0
22.1% Operating margin, as reported (GAAP) 23.8 % 23.0 % 80
bps Starbucks Japan acquisition-related items(5) 1.8 1.7
Non-GAAP operating margin 25.6 % 24.7 % 90 bps
EMEA
Operating income, as reported (GAAP) $ 29.9 $ 36.0 (16.9)% Costs
incurred on sale of Germany retail operations 2.8 —
Non-GAAP operating income $ 32.7 $ 36.0 (9.2)%
Operating margin, as reported (GAAP) 10.9 % 12.2 % (130) bps Costs
incurred on sale of Germany retail operations 1.0 —
Non-GAAP operating margin 12.0 % 12.2 % (20) bps
(1) Includes ongoing amortization expense of acquired intangible
assets and transaction and integration costs, such as incremental
information technology ("IT") and compensation-related costs
associated with the acquisition.
(2) The gain is net of certain costs associated with the
transfer of Germany company-operated retail stores to licensed
stores; these costs are also adjusted for in our Consolidated and
EMEA operating income and operating margin results.
(3) Income tax effect on Non-GAAP adjustments was determined
based on the nature of the underlying items and their relevant
jurisdictional tax rates.
(4) Other tax matters include incremental benefit from
additional domestic manufacturing deductions claimed in our U.S.
consolidated tax returns for periods prior to FY16.
(5) Includes ongoing amortization expense of acquired intangible
assets associated with the acquisition; Q3 FY16 also includes
post-acquisition integration costs, including incremental IT and
compensation-related costs.
Quarter Ended Oct 2, 2016
Sep 27, 2015
Consolidated
(Projected
14-weeks)
(As Reported
13-weeks)
Change Diluted net earnings per share (GAAP) $0.53 - $0.54 $
0.43
23% - 26%
Starbucks Japan acquisition-related items - other(1) 0.01 0.01 Debt
extinguishment-related items(2) — 0.04 Income tax effect on
Non-GAAP adjustments(3) (0.01 ) (0.02 ) Other tax matters(4) —
(0.04 ) Non-GAAP net earnings per share $0.54 - $0.55
$ 0.43
26% - 28%
Year Ended Oct 2, 2016 Sep
27, 2015
Consolidated
(Projected
53-weeks)
(As Reported
52-weeks)
Change Diluted net earnings per share (GAAP) $1.88 - $1.89 $
1.82 3% - 4% Starbucks Japan acquisition-related items - gain(5) —
(0.26 ) Starbucks Japan acquisition-related items - other(1) 0.04
0.04 Debt extinguishment-related items(2) — 0.04 Gain on sale of
Germany retail operations(6) (0.02 ) — Income tax effect on
Non-GAAP adjustments(3) (0.01 ) (0.02 ) Other tax matters(4) (0.01
) (0.04 ) Non-GAAP net earnings per share $1.88 - $1.89
$ 1.58 19% - 20%
(1) Includes ongoing amortization expense of acquired intangible
assets and transaction and integration costs, such as incremental
IT and compensation-related costs associated with the
acquisition.
(2) Represents the loss on extinguishment of debt ($61.1M),
which is comprised of the cost of the optional redemption
provision, unamortized debt issuance costs, and unamortized
discount associated with the $550 million of 6.250% 2017 Senior
Notes redeemed in Q4 FY15, as well as the related unamortized
interest rate hedge loss ($2.0M), which was recorded in interest
expense.
(3) Income tax effect on Non-GAAP adjustments was determined
based on the nature of the underlying items and their relevant
jurisdictional tax rates.
(4) Other tax matters include the incremental benefit from
additional domestic manufacturing deductions claimed in our U.S.
consolidated tax returns for periods prior to the years
presented.
(5) Gain represents the fair value adjustment of Starbucks
preexisting 39.5% ownership interest in Starbucks Japan upon
acquisition, which was almost entirely non-taxable.
(6) The gain is net of certain costs associated with the
transfer of Germany company-operated retail stores to licensed
stores in Q3 FY16.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160721006293/en/
Starbucks Contact, Investor Relations:Durga Doraisamy,
206-318-7118investorrelations@starbucks.comorStarbucks Contact,
Media:Alisha Damodaran, 206-318-7100press@starbucks.com
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